Market Overview

Ameresco Reports Second Quarter 2018 Financial Results

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Second Quarter 2018 Financial Highlights (year over year):

  • Revenues of $197.0 million, compared to $166.7 million, up 18%
  • Net income attributable to common shareholders of $8.7 million,
    compared to $5.8 million, up 49%
  • Net income per diluted share of $0.19, up 46%
  • Adjusted EBITDA of $21.4 million, compared to $15.4 million, up 39%
  • Non-GAAP EPS of $0.18, compared to $0.13, up 38%
  • Record high project backlog of $2.0 billion, up 20%
  • Added 26MWe to assets in development

Ameresco, Inc. (NYSE:AMRC), a leading energy efficiency and renewable
energy company, today announced financial results for the fiscal quarter
ended June 30, 2018. The Company has also furnished supplemental
information in conjunction with this press release in a Current Report
on Form 8-K. The supplemental information includes non-GAAP financial
metrics, and has been posted to the "Investor Relations" section of the
Company's website at www.ameresco.com.

Management Commentary

"Our outstanding performance this quarter reinforces our confidence in
the depth of our market opportunity, and the strength of Ameresco's
evolving business model," said George P. Sakellaris, President and Chief
Executive Officer of Ameresco. "High margin recurring revenue from our
energy assets and operations and maintenance complement the robust
growth in our core efficiency and infrastructure project business. All
of our lines of business have outstanding visibility. We have a line of
sight to $1.7 billion of recurring revenue over the next decade, while
the project backlog has $2 billion of awarded and contracted business.
This combination of high visibility and accelerating growth are valuable
characteristics that differentiate Ameresco's business model."

Financial Results

(All financial result comparisons made are against the prior year period
unless otherwise noted.)

Second Quarter 2018

Revenues were $197.0 million, compared to $166.7 million. Operating
income was $14.0 million, compared to $8.8 million.

Net income attributable to common shareholders was $8.7 million compared
to $5.8 million, and net income per diluted share was $0.19 compared to
$0.13. Non-GAAP EPS was $0.18 compared to $0.13.

Adjusted EBITDA, a non-GAAP financial measure, was $21.4 million,
compared to $15.4 million.

Additional Second Quarter 2018 Operating
Highlights:

  • Cash flows used in operating activities were $20.1 million, compared
    to $19.4 million, and adjusted cash from operations, a non-GAAP
    financial measure, was $13.0 million, compared to $19.5 million.
  • Total project backlog was $2.0 billion and consisted of:
    • $679.1 million of fully-contracted backlog, representing signed
      customer contracts for installation or construction of projects,
      which we expect to convert into revenue over the next two to four
      years, on average; and
    • $1.3 billion of awarded projects, representing projects in
      development for which we do not have signed contracts.
  • Assets in development were $285.9 million or 114 MWe.

FY 2018 Guidance

Based on year to date performance and expectations for the remainder of
2018, Ameresco is revising its 2018 outlook. Ameresco expects net income
per diluted share to be in the range of $0.65 to $0.75, total revenue to
be in the range of $780 million to $820 million, and adjusted EBITDA to
be in the range of $77 million to $87 million in 2018. This guidance
excludes the impact of any non-controlling interest activity and our
restructuring activities, as well as any related tax impact.

Share Repurchase Program

Through the end of the second quarter, the Company repurchased 2,085,497
shares of its Class A common stock for $11.5 million. The Company has
approximately $3.5 million of remaining authorization under the share
repurchase program it announced in May 2016.

Webcast Reminder

The Company will host a conference call today at 8:30 a.m. ET today to
discuss results.

The conference call will be available via the following dial in numbers:

  • U.S. Participants: Dial 1-877-359-9508 (Access Code: 5183618)
  • International Participants: Dial 1-224-357-2393 (Access Code: 5183618)

Participants are advised to dial into the call at least ten minutes
prior to register.

A live, listen-only webcast of the conference call will also be
available over the Internet. Individuals wishing to listen can access
the call through the "Investor Relations" section of the Company's
website at www.ameresco.com.

An archived webcast will be available on the Company's website for one
year.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include references to
adjusted EBITDA, non-GAAP EPS, non-GAAP net income and adjusted cash
from operations, which are non-GAAP financial measures. For a
description of these non-GAAP financial measures, including the reasons
management uses these measures, please see the section following the
accompanying tables titled "Exhibit A: Non-GAAP Financial Measures". For
a reconciliation of these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with GAAP,
please see Other Non-GAAP Disclosures and Non-GAAP Financial Guidance in
the accompanying tables.

About Ameresco, Inc.

Founded in 2000, Ameresco, Inc. (NYSE:AMRC) is a leading independent
provider of comprehensive services, energy efficiency, infrastructure
upgrades, asset sustainability and renewable energy solutions for
businesses and organizations throughout North America and Europe.
Ameresco's sustainability services include upgrades to a facility's
energy infrastructure and the development, construction and operation of
renewable energy plants. Ameresco has successfully completed energy
saving, environmentally responsible projects with federal, state and
local governments, healthcare and educational institutions, housing
authorities, and commercial and industrial customers. With its corporate
headquarters in Framingham, MA, Ameresco has more than 1,000 employees
providing local expertise in the United States, Canada, and the United
Kingdom. For more information, visit www.ameresco.com.

Safe Harbor Statement

Any statements in this press release about future expectations, plans
and prospects for Ameresco, Inc., including statements about market
conditions, pipeline and backlog, as well as estimated future revenues
and net income, and other statements containing the words "projects,"
"believes," "anticipates," "plans," "expects," "will" and similar
expressions, constitute forward-looking statements within the meaning of
The Private Securities Litigation Reform Act of 1995. Actual results may
differ materially from those indicated by such forward-looking
statements as a result of various important factors, including the
timing of, and ability to, enter into contracts for awarded projects on
the terms proposed; the timing of work we do on projects where we
recognize revenue on a percentage of completion basis, including the
ability to perform under recently signed contracts without unusual
delay; demand for our energy efficiency and renewable energy solutions;
our ability to arrange financing for our projects; changes in federal,
state and local government policies and programs related to energy
efficiency and renewable energy; the ability of customers to cancel or
defer contracts included in our backlog; the effects of our recent
acquisitions and restructuring activities; seasonality in construction
and in demand for our products and services; a customer's decision to
delay our work on, or other risks involved with, a particular project;
availability and costs of labor and equipment; the addition of new
customers or the loss of existing customers; market price of the
Company's stock prevailing from time to time; the nature of other
investment opportunities presented to the Company from time to time; the
Company's cash flows from operations; and other factors discussed in our
Annual Report on Form 10-K for the year ended December 31, 2017, filed
with the U.S. Securities and Exchange Commission on March 7, 2018. In
addition, the forward-looking statements included in this press release
represent our views as of the date of this press release. We anticipate
that subsequent events and developments will cause our views to change.
However, while we may elect to update these forward-looking statements
at some point in the future, we specifically disclaim any obligation to
do so. These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of this
press release.

   

AMERESCO, INC.
CONSOLIDATED BALANCE SHEETS
(in
thousands, except share and per share amounts)

 
June 30, December 31,
2018 2017
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 27,952 $ 24,262
Restricted cash 15,103 15,751
Accounts receivable, net 115,596 85,121
Accounts receivable retainage, net 14,669 17,484
Costs and estimated earnings in excess of billings 64,656 104,852
Inventory, net 8,264 8,139
Prepaid expenses and other current assets 14,853 14,037
Income tax receivable 17,237 6,053
Project development costs   16,095   11,379
Total current assets 294,425 287,078
Federal ESPC receivable 246,918 248,917
Property and equipment, net 6,255 5,303
Energy assets, net 404,888 356,443
Goodwill 57,268 56,135
Intangible assets, net 2,414 2,440
Other assets   31,927   27,635
Total assets $ 1,044,095 $ 983,951
 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current portions of long-term debt and capital lease liabilities $ 27,451 $ 22,375
Accounts payable 115,805 135,881
Accrued expenses and other current liabilities 22,800 23,260
Billings in excess of cost and estimated earnings 19,907 19,871
Income taxes payable   1,298   755
Total current liabilities 187,261 202,142
Long-term debt and capital lease liabilities, less current portions
and net of deferred financing fees
221,274 173,237
Federal ESPC liabilities 238,617 235,088
Deferred income taxes, net 8,505 584
Deferred grant income 6,912 7,188
Other liabilities 18,496 18,754
 
Redeemable non-controlling interests 12,322 10,338
 
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no
shares issued and outstanding at June 30, 2018 and December 31, 2017
Class A common stock, $0.0001 par value, 500,000,000 shares
authorized, 29,818,008 shares issued and 27,732,511 shares
outstanding at June 30, 2018, 29,406,315 shares issued and
27,533,049 shares outstanding at December 31, 2017
3 3
Class B common stock, $0.0001 par value, 144,000,000 shares
authorized, 18,000,000 shares issued and outstanding at June 30,
2018 and December 31, 2017
2 2
Additional paid-in capital 119,257 116,196
Retained earnings 247,080 235,844
Accumulated other comprehensive loss, net (4,063) (5,626)
Less - treasury stock, at cost, 2,085,497 shares at June 30, 2018
and 1,873,266 shares at December 31, 2017
  (11,571)   (9,799)
Total stockholders' equity   350,708   336,620
Total liabilities, redeemable non-controlling interests and
stockholders' equity
$ 1,044,095 $ 983,951
 

AMERESCO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in
thousands, except share and per share amounts)

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017   2018     2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ 196,982 $ 166,665 $ 364,392 $ 301,275
Cost of revenues   154,206   131,257     286,143     239,943
Gross profit 42,776 35,408 78,249 61,332
Selling, general and administrative expenses   28,801   26,650     56,005     53,137
Operating income 13,975 8,758 22,244 8,195
Other expenses, net   3,966   1,738     7,510     3,564
Income before provision (benefit) for income taxes 10,009 7,020 14,734 4,631
Income tax provision (benefit)   1,307   1,060     (1,472 )   415
Net income 8,702 5,960 16,206 4,216
Net (income) loss attributable to redeemable non-controlling
interests
    (129 )   (516 )   971
Net income attributable to common shareholders $ 8,702 $ 5,831   $ 15,690   $ 5,187
Net income per share attributable to common shareholders:
Basic $ 0.19 $ 0.13 $ 0.35 $ 0.11
Diluted $ 0.19 $ 0.13 $ 0.34 $ 0.11
Weighted average common shares outstanding:
Basic 45,470,000 45,463,000 45,469,000 45,488,000
Diluted 46,406,000 45,675,000 46,272,000 45,601,000
 

AMERESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)

 
Six Months Ended June 30,
2018   2017
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 16,206 $ 4,216
Adjustments to reconcile net income (loss) to cash flows from
operating activities:
Depreciation of energy assets 12,946 10,220
Depreciation of property and equipment 1,072 1,336
Amortization of deferred financing fees 838 786
Amortization of intangible assets 502 716
Provision for bad debts 303 15
Gain on sale of assets (104 )
Unrealized gain on ineffectiveness of interest rate swaps (133 ) (178 )
Stock-based compensation expense 747 650
Deferred income taxes 9,174 (1,867 )
Unrealized foreign exchange (gain) loss 900 (712 )
Changes in operating assets and liabilities:
Accounts receivable (23,750 ) 18,561
Accounts receivable retainage 2,704 (779 )
Federal ESPC receivable (69,276 ) (72,781 )
Inventory, net (125 ) 2,626
Costs and estimated earnings in excess of billings 29,824 4,101
Prepaid expenses and other current assets 3,490 906
Project development costs (5,331 ) (4,066 )
Other assets (1,380 ) 406
Accounts payable, accrued expenses and other current liabilities (24,365 ) (15,720 )
Billings in excess of cost and estimated earnings (1,421 ) 212
Other liabilities 578 (60 )
Income taxes payable   (10,640 )   97  
Cash flows from operating activities (57,137 ) (51,419 )
Cash flows from investing activities:
Purchases of property and equipment (2,056 ) (1,231 )
Purchases of energy assets (26,197 ) (51,393 )
Proceeds from sale of assets of a business 2,777
Acquisitions, net of cash received   (34,044 )   (2,409 )
Cash flows from investing activities (62,297 ) (52,256 )
Cash flows from financing activities:
Payments of financing fees (2,285 ) (1,614 )
Proceeds from exercises of options and ESPP 2,314 1,077
Repurchase of common stock (1,772 ) (2,269 )
Proceeds from senior secured credit facility, net 6,100 13,200
Proceeds from long-term debt financings 58,634 41,565
Proceeds from Federal ESPC projects 69,664 74,036
Proceeds from Federal ESPC energy assets 690
Proceeds from sale-leaseback financings 21,454
Contributions from redeemable non-controlling interests, net 1,468 1,421
Payments on long-term debt   (10,776 )   (35,987 )
Cash flows from financing activities 124,037 112,883
Effect of exchange rate changes on cash   (231 )   (56 )
Net increase in cash, cash equivalents and restricted cash 4,372 9,152
Cash, cash equivalents and restricted cash, beginning of period   60,105     52,826  
Cash, cash equivalents and restricted cash, end of period $ 64,477   $ 61,978  
 

Non-GAAP Financial Measures (in thousands)

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Adjusted EBITDA:
Net income attributable to common shareholders $ 8,702 $ 5,831 $ 15,690 $ 5,187
Impact from redeemable non-controlling interests 129 516 (971 )
Plus: Income tax provision (benefit) 1,307 1,060 (1,472 ) 415
Plus: Other expenses, net 3,966 1,738 7,510 3,564
Plus: Depreciation and amortization of intangible assets 7,413 6,090 14,520 12,272
Plus: Stock-based compensation 392 307 747 650
Plus: Restructuring and other charges (352 ) 244   (320 ) 244  
Adjusted EBITDA $ 21,428   $ 15,399   $ 37,191   $ 21,361  
Adjusted EBITDA margin 10.9 % 9.2 % 10.2 % 7.1 %
 
Non-GAAP net income and EPS:
Net income attributable to common shareholders $ 8,702 $ 5,831 $ 15,690 $ 5,187
Impact from redeemable non-controlling interests 129 516 (971 )
Plus: Restructuring and other charges (352 ) 244 (320 ) 244
Plus: Income tax effect of non-GAAP adjustments   (44 ) (27 ) (44 )
Non-GAAP net income $ 8,350   $ 6,160   $ 15,859   $ 4,416  
 
Diluted net income per common share $ 0.19 $ 0.13 $ 0.34 $ 0.11
Effect of adjustments to net income (0.01 )       (0.01 )
Non-GAAP EPS $ 0.18   0.13   0.34   0.10  
 
Adjusted cash from operations:
Cash flows from operating activities

$

(20,067 ) $ (19,408 ) $ (57,137 ) $ (51,419 )
Plus: proceeds from Federal ESPC projects 33,083   38,869   69,664   74,036  
Adjusted cash from operations $ 13,016   $ 19,461  

 

12,527   $ 22,617  
 
Three Months Ended June 30,

 

2018 2017
(Unaudited) (Unaudited)
Construction backlog:
Awarded(1) $ 1,298,500 $ 1,013,500
Fully-contracted 679,100   631,400  
Total construction backlog $ 1,977,600   $ 1,644,900  
Energy assets in development(2) $ 285,900 $ 202,400
 

 

Three Months Ended June 30

Six Months Ended June 30

2018

2017

2018

2017

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

New contracts and awards:

New contracts

$

221,800

$

238,400

$

356,800

$

293,500

New awards(1)

$

227,300

$

113,700

$

456,300

$

349,400

(1) Represents estimated future revenues from projects that have been
awarded, though the contracts have not yet been signed

(2) Estimated total construction value of all energy assets in
construction and development

 

Non-GAAP Financial Guidance

 
Adjusted earnings before interest, taxes, depreciation and
amortization (adjusted EBITDA):
(in thousands)
Year Ended December 31, 2018
  Low High
Operating income $ 46,000   $ 54,000
Depreciation and amortization of intangible assets 30,000   31,000
Stock-based compensation 1,000   2,000
Restructuring and other charges  
Adjusted EBITDA $ 77,000   $ 87,000
 

Exhibit A: Non-GAAP Financial Measures

We use the non-GAAP financial measures defined and discussed below to
provide investors and others with useful supplemental information to our
financial results prepared in accordance with GAAP. These non-GAAP
financial measures should not be considered as an alternative to any
measure of financial performance calculated and presented in accordance
with GAAP. For a reconciliation of these non-GAAP measures to the most
directly comparable financial measures prepared in accordance with GAAP,
please see Other Non-GAAP Disclosure and Non-GAAP Financial Guidance in
the tables above.

We understand that, although measures similar to these non-GAAP
financial measures are frequently used by investors and securities
analysts in their evaluation of companies, they have limitations as
analytical tools, and investors should not consider them in isolation or
as a substitute for the most directly comparable GAAP financial measures
or an analysis of our results of operations as reported under GAAP. To
properly and prudently evaluate our business, we encourage investors to
review our GAAP financial statements included above, and not to rely on
any single financial measure to evaluate our business.

Adjusted EBITDA and Adjusted EBITDA Margin

We define adjusted EBITDA as operating income before depreciation,
amortization of intangible assets, stock-based compensation expense,
restructuring charges, loss related to a significant non-core project in
Canada and charges related to a significant customer bankruptcy. We
believe adjusted EBITDA is useful to investors in evaluating our
operating performance for the following reasons: adjusted EBITDA and
similar non-GAAP measures are widely used by investors to measure a
company's operating performance without regard to items that can vary
substantially from company to company depending upon financing and
accounting methods, book values of assets, capital structures and the
methods by which assets were acquired; securities analysts often use
adjusted EBITDA and similar non-GAAP measures as supplemental measures
to evaluate the overall operating performance of companies; and by
comparing our adjusted EBITDA in different historical periods, investors
can evaluate our operating results without the additional variations of
depreciation and amortization expense, stock-based compensation expense,
restructuring charges and loss related to a significant non-core project
in Canada. We define adjusted EBITDA margin as adjusted EBITDA stated as
a percentage of revenue.

Our management uses adjusted EBITDA and adjusted EBITDA margin as
measures of operating performance, because they do not include the
impact of items that we do not consider indicative of our core operating
performance; for planning purposes, including the preparation of our
annual operating budget; to allocate resources to enhance the financial
performance of the business; to evaluate the effectiveness of our
business strategies; and in communications with the board of directors
and investors concerning our financial performance.

Non-GAAP Net Income and EPS

We define non-GAAP net income and earnings per share ("EPS") to exclude
certain discrete items that management does not consider representative
of our ongoing operations, including restructuring charges, loss related
to a significant non-core project in Canada, impact from redeemable
non-controlling interest and charges related to a significant customer
bankruptcy. We consider non-GAAP net income and non-GAAP EPS to be
important indicators of our operational strength and performance of our
business because they eliminate the effects of events that are not part
of the Company's core operations.

Adjusted Cash from Operations

We define adjusted cash from operations as cash flows from operating
activities plus proceeds from Federal ESPC projects. Cash received in
payment of Federal ESPC projects is treated as a financing cash flow
under GAAP due to the unusual financing structure for these projects.
These cash flows, however, correspond to the revenue generated by these
projects. Thus we believe that adjusting operating cash flow to include
the cash generated by our Federal ESPC projects provides investors with
a useful measure for evaluating the cash generating ability of our core
operating business. Our management uses adjusted cash from operations as
a measure of liquidity because it captures all sources of cash
associated with our revenue generated by operations.

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